News

High Calf Prices Slow Cow Slaughter

BRAZIL - Dry weather and lower volume of rain in Brazil, usually forces cattle farmers to increase the slaughter of female cattle.

This year, however, even with a significant amount of dry weather in several states, the number of these slaughterings is lower because of the valuation of the calves.

Encouraged by prices in 2014, with records in October, calf producers, who still have pastures in reasonable condition are preferring to hold on to the female cattle.

IBGE (Brazilian Institute of Geography and Statistics) data covering the slaughter numbers and Inmet (Brazilian meteorological centre) information about the volume of rains, show that the volume of rain in the first quarter of 2013 was 403mm, on average, in São Paulo State; in the same period, about 214,000 cows were slaughtered in the state.

In the first quarter of 2014, the volume of fell to 358 mm, while the number of female animals slaughtered rose to 270,000.

In the second quarter (from April to June – most recent data available), although the rain was lower (only 124 mm compared to 200 mm in the same period in 2013), the volume of slaughtered cows fell to 250,000 animals (compared to 283,000 from April to June last year).

According to the Brazilian agricultural statistics agency Cepea this highlights the increase in calf activity.

In June, the average of calf prices in São Paulo State was 1,038.00 BRL, nine per cent higher compared to the average of March and significant 22 per cent more compared to December 2013.

The low supply of animals has meant prices have continued to hit new records. The ESALQ/BM&FBovespa Index (São Paulo State) closed at 140.18 BRL ($56.71), 8.5 per cent higher compared to 30 September.

However, slaughterhouses continue to claim they are having difficulty in purchasing new batches and, at the same time, transferring price rises of fed cattle to beef in the wholesale market.

According to the plants surveyed by Cepea, because of the current high price levels, demand is becoming more sensitive to new adjustments.

In the swine sector, the good performance of shipments is one major aspect supporting prices in the domestic market and the low supply of slaughter-ready animals is reinforcing these increases.

Domestic demand, however, is seeing purchasers continue to be restrained because of the low liquidity in the wholesale and retail markets.

As for the poultry market, broiler prices weakened at the end of October, while competing meats’ prices continued to increase. As a result, differences among broiler and beef and pork are the highest of Cepea series, which started in 2004 for the poultry market.